CODA Says Retailers are Failing to Close the Information Gap Between Finance and Other Business Systems

CODA Group, the finance systems specialist, today expressed concern that the focus retailers have had to give front-office technology such as Chip and PIN in 2004 has stopped them from linking finance systems with other business systems, essential for performance management and regulatory compliance.

Many retailers have seen high profile failures recently because they have been unsuccessful at linking EPOS systems, including electronic payment/authorisation with merchandise demand forecasting and replenishment software and their finance systems.

Jeffrey Roster, Principal Analyst at Gartner Research said in his ‘Retail and Wholesale Forecast for 2001 – 2006’: “The checkout and in-store experiences are changing. Retailers now have access to faster processors, more computing power to the stores, the use of cheque imaging, smart cards and kiosks. Retail managers will have wireless devices to do everything from resetting passwords to viewing security cameras across a wireless LAN. This new technology offers great potential to retailers. Yet, the majority of retailers still describe themselves as not having a highly integrated business and IT strategy.”

From 1 January 2005, all UK listed retailers are required to produce financial reports under the new International Financial Reporting Standards (IFRS). Following a series of corporate scandals, legislators have company executives in their sights, and are arming themselves with ever-greater regulatory firepower. For retailers, a respected brand is often their most important asset and can be directly linked to share price, so good governance to protect that is essential.

Tony Pickering, Retail Sector Manager at CODA Group, said: “For retailers, increased accountability, risk and compliance management are major concerns for 2005. However, many have had to postpone much needed IT integration projects to facilitate the introduction of more customer-facing technology. This means that many are working from old financial software releases which are not yet integrated properly with other operational systems throughout the business. Many Finance Directors do not have a real view of how the company is performing at a branch and corporate level. As we move into 2005, I believe that it will become more and more obvious that retailers are falling behind other sectors in meeting regulatory compliance and that the focus should now be on linking finance systems in order to automate these processes..”

It is estimated that the UK retail industry has spent £1bn on implementing Chip and PIN technology to date, but in 2004, a fraction of this was spent on back-office systems which hold critical business information. For this reason, retailers are struggling to get the systems in place to provide a realistic, timely, and up-to-date assessment of the company’s position and results as well as ensuring that management controls and reporting procedures are satisfactory and reliable. This could have a direct impact on their share prices.